Can ethical consumption and the capitalist model coexist? It is currently accepted that consumption is a prevalent feature of the capitalist system. The challenge is in increasing the sustainability of the system and improving quality of life. This model advocates the transition from unfettered consumerism to one where ethical decisions are incorporated into our purchasing decisions. This means increasing the prevalence of ethical consumption.
Ethical consumption is defined as the voluntary purchase of goods and services whose production mitigates particular socio-environmental concerns (Doane, 2001). This includes issues like child-labour, animal welfare and environmental sustainability. There is a substantial body of research that suggests a growing market for the purchase of ethical products and services (Zavestoski, 2001; Jackson, 2005). However, surveyed purchasing habits suggest that the reality of ethical consumption is much different to that proposed by idealistic respondents. The price premium attached to fair-trade or green products regularly appears as a deterrent in consumer behaviour (The Roper Organisation, 1990; Boulstridge & Carrigan, 2000; Carrigan & Attalla, 2001).
The proposed model operates under a relatively free market. It is suggested that goods and services produced to an ethical and sustainable standard should be exempt from a sales tax, (Goods and Services Tax or Value-added Tax). The idea is to encourage the uptake of ethical products by minimising the cost-advantage that less scrupulous organisations have in the market. This is a departure from the incentives based policies that are normally adopted by governments. Governments tend to apply fiscal penalties that impact the consumer rather than removing cost barriers that restrict their choice. For example the drain that smoking related illness places on health systems is generally approached by deterring the undesired behaviour with a punishment (i.e. an additional excise tax on cigarettes to dissuade their use). At the same time, the market dictates that people should pay an average 30% price premium for free-range eggs (Westgren, 1999). This emphasises the distinct gap between current policy and socially desirable outcomes.
We propose to address this by ascribing an ethical labelling or qualmark to goods and services that adhere to a set of independently defined standards. This would differentiate products and provide a visual cue for consumers to more easily accommodate ethical considerations into their decisions. An example of a similar application is the New Zealand Heart Foundation ‘tick’ on food products. Young and Swinburn (2002) found that 59% of their survey respondents used the Heart Foundation ‘tick’ in making purchase decisions for their food products. Furthermore, they found that food manufacturers responded to this consumption trend. The average reduction of additive sodium was between 26-61% across a variety of food products (Young & Swinburn, 2002, p.13). This is an encouraging statistic because it illustrates the power that consumers command over industries.
The differentiation of ethical products is not a new concept, however. Sedjo and Swallow (2002) describe various attempts at eco-labelling timber products across the world. They explore a voluntary model of certification with a view to adding a price premium on timber from ‘an environmentally benign production process’ (Sedjo & Swallow, p.272). Ultimately they conclude that the additional price to the consumer would result in insufficient demand. This validates the cost-barrier argument of Pelsmacker, Driesen and Rayp (2005). An ethical consumption model should therefore be voluntary, as this gives consumers the right to choose. It also means that existing industries would not be instantaneously decimated, or burdened with compliance costs. Goods that did not have the ethical qualmark would still remain in circulation. It is hoped that an erosion of market share to the qualmarked brands would pressure these organisations to lift standards, or exit the market.
While capitalism predisposes people towards overconsumption, this is not a necessary condition. Consumers desire to apply ethical considerations into their purchasing habits is often overridden by the price premiums associated with such products. By limiting the cost advantage that is often linked to mass produced goods, consumers will have an enhanced freedom of choice. The purchasing power of the consumer could ultimately lead to more sustainable methods of production within industries.
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